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Prospects and Challenges for EU-China Relations in the 21st Century

The Partnership and Cooperation Agreement


Edited By Jing Men and Giuseppe Balducci

In 25 years, EU-China relations have come far, further than many could have imagined – but how much further can these relations be taken? Today, their bilateral relations are at a crossroads. In effect, it has been 25 years since the EU and China agreed upon the legally binding Trade and Economic Cooperation Agreement, which sets the basis for their diplomatic relations. In an ever increasingly complex and globalised international environment, these actors have become mutually interdependent on a variety of levels. In 2007, they agreed to revise and update the 1985 accord and replace it with an all-encompassing Partnership and Cooperation Agreement. However, more than three years passed, and there are many points of contention which need to be negotiated. What obstacles are blocking this agreement? How can these obstacles be overcome? What concessions should be made and where?
This book will provide an up-to-date analysis of the problematic concerns, and the means to resolve these issues, that range from human rights, to international trade conflicts and climate change.


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CHAPTER 5 EU-China Investment Promotion and Protection Rules (Nayia Pyridi) 129


129 CHAPTER 5 EU-China Investment Promotion and Protection Rules Nayia PYRIDI Under existing EU law, the power to enter into bilateral investment treaties (BITs) with third countries has not been delegated to the European Community, but still remains within the competence of each member state. As a consequence, the regulation of EU-China investment activities is primarily based on 25 heterogeneous BITs concluded between EU member states (with the exception of Ireland and Malta) and China, under the general framework of the 1985 EC-China Trade and Economic Cooperation Agreement (TECA). Although they follow the same general format, each BIT is different from the other on certain important issues. As a result, the network of BITs governing EU-China investment relations introduces elements of confusion, inefficiency and uncertainty – it enhances the fragmentation and overlapping of different regimes applicable to foreign investments – due to the fact that China undertakes different commitments vis-à-vis investors originating in the EU. This differentiates the conditions under which such investors establish and operate their activities in the same host country. The current situation, though, is about to encounter a radical shift when the Lisbon Treaty comes into force. Conscious of the need to harmonise EU external economic relations in the field of promotion and protection of EU investors abroad, the drafters of the Lisbon Treaty transferred the power to conclude BITs from the member states to the EU. Under the new Article 207 of the Treaty on the Functioning of the EU (TFEU), FDI becomes an integral part...

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